Decomposing the Ethnic Gap in Rural Vietnam, 1993-2004

This paper examines and decomposes the gap in per capita expenditures between majority and minority ethnic groups in rural Vietnam between 1993 and 2004. Over this period, the real expenditure gap between rural Kinh and Chinese-headed households and those headed by ethnic minorities increased by 14.6%. Approximately two-fifths of the mean gap is found to be due to differences in household endowments (in particular demographic structure and education), and at least half due to differences in returns to these endowments. Geographic variables explain less than one-fifth of the gap. Over half of the increase in the mean gap is linked to temporal changes in unobservable factors, and less than a quarter to the majority's endowments improving more rapidly than those of the minorities. Broadly similar findings are detected using quantile regression analysis. These findings raise important questions concerning the drivers of the disadvantage faced by Vietnam's ethnic minorities.